Causality for the Government Budget and Economic Growth

Afonso, António; Jalles, João Tovar

doi:10.2139/ssrn.2429909

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Causality for the Government Budget and Economic Growth

Department of Economics, ISEG-UL, Working Paper nº WP07/2014/DE/UECE

6 Pages Posted: 28 Apr 2014

See all articles by António Afonso

António Afonso

University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics); ISEG Lisbon School of Economics and Management,Universidade de Lisboa; REM - Research in Economics and Mathematics

João Tovar Jalles

University of Lisbon; International Monetary Fund (IMF); Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE)

Date Written: April 27, 2014

Abstract

We use a panel of 155 countries for 1970-2010 to study (two-way) causality between government spending, revenue and growth. Our results suggest the existence of weak evidence supporting causality from expenditures or revenues to GDP per capita and provide evidence supporting Wagner’s Law.

Keywords: government expenditures, goverment revenues, panel causality, GMM

JEL Classification: C23, E62, H50

Suggested Citation: Suggested Citation

Afonso, António and Jalles, João Tovar, Causality for the Government Budget and Economic Growth (April 27, 2014). Department of Economics, ISEG-UL, Working Paper nº WP07/2014/DE/UECE, Available at SSRN: https://ssrn.com/abstract=2429909 or http://dx.doi.org/10.2139/ssrn.2429909